How to Trade Forex for Beginners - A Complete Guide to Reading Forex Trading Charts

2026-01-05 16:42:53

If you want to confidently enter the Forex trading world, understanding candlestick charts thoroughly is fundamental. Even those seeking big gains in the currency market can rely solely on Forex chart analysis. This article is designed to explain how to read candlestick charts in detail, along with important patterns you should know.

Understanding Candlestick Charts Before Mastering Forex Trading

What is a candlestick chart? Each candlestick represents price movement within a specified time frame, which could be 15 minutes, 1 hour, or even 1 week.

Each candlestick tells you four things:

Open Price - The price at the start of the period
Close Price - The price at the end of the period
High Price - The highest point during that period
Low Price - The lowest point during that period

When the close price is higher than the open price, the candlestick appears in a white (Bullish) color, indicating buyers had control during that period. When the close price is lower than the open, the candlestick appears in black (Bearish), showing that sellers dominated.

Key Components of a Candlestick

Body (Body) - The central part of the candlestick indicates significant price change. A long body = large price movement; a short body = small price change.

Wicks/Shadows (Wicks/Shadows) - The lines extending above and below the body. Long wicks = strong profit-taking or rejection; short wicks = relatively stable market.

Why Do Most Traders Love Candlestick Charts?

1. Clear Market Sentiment - Candlesticks reflect how traders are feeling, not just the price line.

2. Clear and Easy to Understand Patterns - Candlestick charts have repeating patterns that help predict future directions more accurately.

3. Proven Results - Japanese traders have used them for over 200 years since rice trading days, and they still work.

4. Compatible with Other Tools - You can combine candlesticks with trend lines, support-resistance levels, or other indicators to strengthen your analysis.

One-Candlestick Pattern You Must Know

Doji - Sign of Indecision

A candlestick with open and close prices at the same level indicates that buyers and sellers are in balance. It can signal a potential trend reversal.

Doji Types (4):

Standard Doji - Small wicks on both ends
Gravestone Doji - Long upper wick, indicating buying pressure after being pushed down
Dragonfly Doji - Long lower wick, indicating selling pressure after being pushed up
Four Price Doji - Very short wicks on all sides, a sign of indecision

Marubozu - Pure Commitment

A full-bodied candlestick with no wicks, meaning strong buying or selling dominance.

Marubozu White = Buyers control the entire period
Marubozu Black = Sellers control the entire period

Spinning Top - Indecision

A small body with long wicks on both sides, indicating that buyers and sellers are at a standoff, with no clear winner.

Two-Candlestick Patterns That Are Important

Bullish Engulfing & Bearish Engulfing

When the second candlestick completely engulfs the first, it signals a clear trend reversal.

Bullish Engulfing = Black (downtrend) followed by White (uptrend)
Bearish Engulfing = White (uptrend) followed by Black (downtrend)

Tweezer Tops & Tweezer Bottoms

Two candles with equal long wicks, like tweezers.

Tweezer Tops = Potential reversal from uptrend
Tweezer Bottoms = Potential reversal from downtrend

Three-Candlestick Patterns - High Level

Morning Star & Evening Star

Strong reversal signals consisting of three consecutive candles.

Morning Star = Downtrend - Doji - Uptrend = Reversal from downtrend to uptrend Evening Star = Uptrend - Doji - Downtrend = Reversal from uptrend to downtrend

Three White Soldiers & Three Black Crows

Trend continuation signals, with each candle larger than the previous one.

Three White Soldiers = 3 consecutive white candles = continued uptrend
Three Black Crows = 3 consecutive black candles = continued downtrend

Three Inside Up & Three Inside Down

Complex and strong patterns requiring the third candle to break beyond the first candle’s range.

Important Points to Remember

Don’t rely on a single candlestick - While candlestick charts are powerful, always wait for confirmation from another candle.

Consider the context - The pattern may differ depending on where it occurs in the trend (at the end vs. in the middle).

For beginners - Start with single-candle patterns, then upgrade to two-candle patterns, and then to three-candle patterns.

Success rate is not 100% - Even the best patterns have only about a 50% success rate at times. Risk management and emotional control are as important as analysis.

Multiple candles are better than single candles - Combine candlestick signals with other analysis methods for more accurate Forex trading.

Learning candlestick charts is just the beginning of your Forex trading journey. The more you practice, the better you will read the market.

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